Balance Sheet Components

6 Months Ended

Jun. 30, 2022

Note 5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	June 30,		December 31,
	2022		2021
Prepaid expenses	$	434	$	333
Prepaid insurance		691		1,144
Prepaid research and development expenses		1,131		1,899
Australia research and development refundable tax credit		2,063		1,128
Other current assets		387		367
Total prepaid expenses and other current assets	$	4,706	$	4,871

Cortexyme Australia, Pty, Ltd is eligible to obtain a cash refund from the Australian Taxation Office for eligible R&D

expenditures under the Australian R&D Tax Incentive Program (the “Australian Tax Incentive”). The Australian Tax Incentive is recognized as a reduction to R&D expense when there is reasonable assurance that the relevant expenditure has been incurred, the amount can be reliably measured and the Australian Tax Incentive will be received. The Company recognized reductions to R&D expense of $0.4 million and $0.5 million for the three and six months ended June 30, 2022 and $0 reductions to R&D expense for the three and six months ended June 30, 2021.

Novosteo Pty, Ltd is eligible to obtain a cash refund from the Australian Taxation Office for eligible R&D expenditures

under the Australian Tax Incentive as well. The Company will receive a refundable tax credit of $0.6 million for the six months ended June 30, 2022.

Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):


	June 30,			December 31,
	2022			2021
Computer equipment	$	18		$	53
Lab equipment		342			528
Finance lease right of use assets		124			557
Leasehold improvement		63			58
Office furniture		—			26
Less: accumulated amortization and depreciation		(183	)		(959	)
Property and equipment, net	$	364		$	263

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	June 30,		December 31,
	2022		2021
Personnel expenses	$	625	$	820
Severance expense		673		—
Professional fees		351		462
Research and development expenses		1,861		7,108
Current portion of operating lease liabilities		317		741
Current portion of finance lease liability		74		—
Other		182		180
Total accrued expenses and other current liabilities	$	4,083	$	9,311

In response to the reprioritization of the Company's pipeline following the clinical hold on atuzaginstat (COR388) IND

application, on February 2, 2022, the Board approved a cost reduction program to reorganize operations and allow continued support for the needs of the business. Under the cost reduction program, the Company is reducing headcount through a reduction in workforce. A majority of this reduction in force took place by June 30, 2022, and is expected that the remainder will be completed by July 2022. To be eligible for the severance payments, employees must remain with the Company through their communicated severance date. The Company is recognizing the severance and related expenses over the requisite employment obligation period.


	June 30,
	2022
Beginning accrued severance	$	—
Incurred during the period		3,625
Severance paid during the period		(2,952	)
Ending accrued severance	$	673